Exam 4: Investment Planning

If you are looking to add a new mutual fund for the purpose of diversification, the fund you would select would have what?

Your client wants to know the systematic risk of his diversified portfolio. What would you first determine before answering the client's question?

You have a new client, it is time to make investment decisions and you want to reduce professional liability exposure; what should be created for each client?

Interest rates have an inverse relationship with what type of investments?

What would have to be completed to compare the benefits of a project to the cost of a project?

What is a bond? Select all that apply:

Your client want to invest 80 percent of their funds in stocks that are steady and not effected by the economy and to invest another 20 percent of their funds in stock that would take advantage of economical shifts. Where type of stocks would you suggest 80 percent of the funds purchase?

What investments types rely on demand for pricing?

Behind the random walk model, the current price is the best prediction of future prices.

Some bonds are debt obligations issued by state and local governments, others are sold with no coupon at a discount, still others are promissory notes; what type of bond are issued to purchase specific fixed assets that are pledged to secure debt?

A client is an owner of a semi-large firm in Kansas, but they want to retain their dollars for use later to pay for goods purchased from other U.S. firms. The client has decided to take some funds and invest in Barclays Bank in London. What would the client's funds be known as once the investment is made?

Higher rates of return do not alone indicate superior performance. For a complete picture of a fund's performance risk and return must be calculated; what are the composite measures?

If a corporation issues a 10-year $100,000 8% bond. What is the total that the issuing corporation pays to the bondholder over the next 10 years?

The tangent line is strongly related to duration; both estimate the rate of change in price. After the first percentage change in price, what is used to approximate the second and added to the duration?

Beta used to determine risk is only accurate when calculated for what?

What measurement does not include any reinvestment income or price appreciation or depreciation?

Your 68 year old client wishes to make an investment, but doesn't want any risk or have their money tied-up for too long; what investment vehicle would be best for the given situation?

Volatility is the amount by which the price of a security swings up and down. If the price of a security moves up and down frequently, it has_____ volatility. Fill in the blank with the most suitable word.

A client has $100,000 to invest. They are considering a short-term investment that is unsecured but think it may be a good idea to have the issuer to be a large corporation. What investment vehicle should a financial planner suggest?

Your client's investment stocks are not paying cash dividends but he wants to know how much the value of her stocks is. You inform her that there is a way to determine the value without cash dividends; what would you use to determine the stock value?